News and Insight for Sales Leaders by Gerhard Gschwandtner

May 2013

05/29/2013

I used to say that problems were nothing but wake up calls
for creativity. Although that's still my opinion, I also recognize that
successful problem solving requires a methodology, a reliable approach that
leads to a solution most of the time.

In 1957, Robert Solow of MIT estimated that of the total
increase in United States
output per man-hour in 40 years (1909 to 1949), only 12.5 percent was due to
increases in capital equipment, while 87.5 percent was due to technological
progress and other gains in human knowledge and skills. Solow received the
Nobel Memorial Prize in Economic Science for his discovery. His research
suggests that our ability to apply new technology and ideas to business
problems is the most important factor for business growth. Likewise, in
selling, the most important factor for developing new business is the
salesperson's ability to solve problems.

There are three factors limiting our ability to grasp,
define, and solve problems: First, there is a limit to our ability to focus on
problems. During a sales call, we often move from problem to problem without
getting a clear sense of which one is the most important to the customer. Our
attention tends to bounce from one thing to another, leading to an insufficient
understanding of the big picture.

Second, customers have a limited vocabulary for describing
their problems. They often don't know what they really need, and as a result
they go out and shop for solutions instead of define their problems. Third, we
often overestimate the size of the problem and the time necessary to develop a
workable solution.

1. Take notes as you listen to your customers. Use your
customer’s language. For example, a customer may say, "We need to pick up
the pace in our finishing department." It's to your advantage to refer to
the customer's problem as "picking up the pace" and not as
"speeding up finishing."

2. Encourage your customers to give you more details. The
more time they invest in talking to you about their problems, the greater your
chances of seeing the total picture. Also, your listening shows that you care.

3. Offer statements that clarify and help your customer thoroughly
understand his or her situation. For example, you may ask, "You've
mentioned that you need to pick up the pace in the finishing department. What
options do you have for achieving this goal?" Or, "We've discussed
several problems involved in this department. What would you consider as the
three most important ones?"

4. Always ask your customers about solutions they’ve already
considered. This will reveal their ability to think creatively. Also, you may
find out if your customers have spoken to your competition.

5. Identify the consequences and penalties for leaving the
problem alone. Ask, "What would happen if you did nothing about these
problems?" This question tends to increase the customer's sense of urgency
about finding a solution.

6. Present your solution as one choice among several
possible solutions. For example, you might say, "There are several ways to
look at this problem. First, you may consider upgrading your existing system.
Second, you may want to leave the problem alone. Third, you could talk to one
of my existing customers about his experience converting to our new
system." Instead of presenting your best solution as the only choice, let
your customer pick your best solution among two other, less desirable
alternatives.

7. Help your customer discover the advantages of the best
solution. Ask, "Let's assume for a moment that you would choose this
solution. What benefits would you see in making this choice?" This
question will tell you how much value your customer places in your solution. If
your idea represents the best solution to the customer's problem, you're ready
to close the sale.

05/20/2013

Xactly just wrapped up our third annual CompCloud user conference in San Francisco last week. It was great to spend a few days listening to our customers and sharing our plans for the next year or so.

We were pleased to go into more depth with them about our new products and services, including Xactly Insights, which I wrote about in March. We’ve analyzed eight years’ worth of anonymized customer data from hundreds of companies to establish benchmarks and best practices in incentive compensation and motivation.

Our principal compensation strategist, Erik Charles, will detail some of our findings on Wed., May 22, at 10 a.m. Pacific time in a free joint webinar with Selling Power. He’ll discuss quota attainment, and what our data shows on issues including:

Quota timing, and why short and long measurement periods can deliver different results

What to look for when determining the true total cost of a sale

How you can hurt performance by measuring too much

The benefits of having this “big data” analysis are very real. Michael DeLeonardis, our VP of Insights and Benchmarks, says that “companies that use data always get a better ROI.” Imagine, for example, if you had two similar territories with a $1 million difference in spend. A deeper look could pinpoint the cause and help you get expenses in line.

DeLeonardis says that when strategic business decisions are driven by data, he’s seen revenue increase by 10 percent, productivity by 30 percent, and margins by a significant amount.

One of the most powerful applications of our Insights data is that it can be used to drive behavior much more effectively than by simply making assumptions about how to improve sales results. Our data highlighted three factors that are widely assumed to drive behavior, but in fact seem to have a negligible effect:

Holdsandreleases: Sales reps commonly aren’t paid their commission when they make a sale; they’re paid at a later date because the company wants some secondary behavior, such as invoicing or collection. Some companies use holds to influence sales behavior as well, but our data found no evidence that that’s the case.

Plan components: Some customers have designed compensation plans with 10–15 measures. Our data validates the industry belief that two or three measures are ideal, and that performance drops at five.

Credit assignment: Examples in which many people were credited on deals also showed no improvement in sales behavior.

On the other hand, some that drive behavior effectively:

Quota timing: Shorter, more frequent periods can improve performance. A higher percentage of reps meet quota when they have monthly or year-to-date quotas than if they’re measured quarterly or annually. The exception is for products with very long sales cycles, when it’s not realistic to shorten the time.

Pay mix: The mix between base salary and variable pay does have a correlation to performance. The ideal mix varies by sales role, industry, and other factors.

Capping: The practice of setting a maximum amount that sales reps can earn, regardless of their performance, has a negative impact on sales behavior. Caps prevent reps from reaching their peak performance, and indirectly encourage them to relax after their quotas are met.

These are just some of the ways we’re using data to develop our Insights services. I hope you’ll join our webinar on Wednesday for more on how Big Data can help you incent your sales team to attain and exceed quota.

05/10/2013

I recently attended a conference where one of the speakers
gave this advice to sales managers: "All you have to do to increase sales
is to teach your salespeople to repeat their own best performance more
often." This sounds like a good idea, but I know that many salespeople
can’t transfer their skills from one situation to another or from one job to
another. They suffer from an inability to change and adapt. Here are some
illustrations:

A change in product line

A sales rep in the multilevel
marketing field who made $1.2 million in commission only a few years ago told
me that, last year, he barely made $50,000. The company he represented lost a
legal battle, and they had to cut their product line in half. At the height of
his success, he led a flamboyant lifestyle – bought a Rolls Royce and overinvested
in real estate. He tried to take his skills to another company that offered him
greater opportunities, but he could not make the emotional connection to the
new product line. His rigid mind-set impaired his skill set, and today, only
his creditors follow his footsteps.

A change in the market

Last week, I spoke with a sales
trainer who served the magazine industry for 20 years. Only six years ago, her
annual income was more than $400,000, but last year, her income barely reached
$100,000. Her sales and training skills are still sharp, but she didn’t have
the courage to take her skills to another market sector that would have exposed
her to richer opportunities. In her case, the fear of change prevented her from
realizing that the best skills and talents lose their value in a rapidly
shrinking marketplace.

A change in self-image

After a string of successful experiences,
some salespeople feel that they have arrived and believe that they are the
masters of the universe. I remember interviewing a sales manager whose resume
stated that he helped his previous company increase sales by 150 percent. After
checking his story, I found that he did well because the company had a great product
that reached the market at the right time, and his salespeople were diligent
order-takers. During the interview, I sensed that he had an inflated
self-image. He bragged too much about his success. When I asked him to explain
a nine-month gap in his resume, he claimed that he was traveling the world. Later,
I learned that he had spent those nine months trying out three other jobs and
was quickly let go from each one. He made me think of the Wall Street saying,
“Don’t confuse capital gains with brains.”

Success has many authors, and it is hard to determine the
origins of success. Yet there are salespeople who successfully carry their
skills from one company to the next and deliver great results. I know
salespeople who left the New York Times
to join AOL and dramatically boosted their incomes. Later, they joined Google
and continued their success trajectory. These are the salespeople who
continuously learn, adapt, and change.

Psychoanalyst Erik Erikson once called the key conflict of
growing as a struggle between generativity and stagnation. Stagnation leads to
an erosion of skills. People who stagnate become so involved with themselves
that they become unable or unwilling to take on new challenges. They have
bought the illusion that they have "arrived" and feel entitled to
being celebrated and waited on.

Generativity, on the other hand, is the drive for renewal,
the hunger for growth, the need to achieve that next level of positive
transformation. While the forces of generativity become responsible for
advancing and growing, the forces of stagnation arrest growth and spur erosion.
We know that there are limits to our capacity for growth, just as there are
limits to how much we can slow erosion.

Salespeople who know how to duplicate their success have
learned that the bend in the road is not the end of the road – unless we refuse
to make the turn.

05/02/2013

The world of selling is changing at breakneck speed, and
sales leaders need to adapt quickly or risk becoming obsolete. Here are the
four major trends impacting sales organizations today:

1. Social media.
A recent study by the Aberdeen Group shows that 79 percent of salespeople who
incorporate social media into their sales process make quota, compared to the
industry average of 43 percent. A HubSpot survey finds that companies using
Twitter get two times more leads than companies that don’t. Research by InboxQ
shows that 64 percent of customers are more likely to purchase from a business
that answers their questions on Twitter.

To stay ahead of the curve, it may be a good idea to create
a new strategy that includes “social listening” and the creation of engaging
content. If your company doesn’t have a LinkedIn group, it’s time to start one.
Every salesperson should have a LinkedIn profile that enhances your company’s
brand. Teach your salespeople how to use such tools as HootSuite to track
clients on Twitter and share content with customers and prospects.

2. Mobile. A
Gartner survey predicts that by 2015, tablets will outsell PCs by 72 percent.
Last month, laptop shipments realized their biggest monthly decline in years.
More and more applications are now available on mobile devices, such as CRM;
configure, price, quote tools; sales intelligence; compensation management;
social media; and online collaboration and presentation tools. The most
successful companies have equipped their sales teams with smartphones and
tablets that are connected to the company’s sales-enablement content. Customers
are impressed when salespeople can answer their questions by tapping a
mobile-device screen and playing a quick customer testimonial on video or
configuring a complex product on an iPad.

3. Cloud computing.
More and more companies access Cloud-based apps through a browser while the
data are stored on servers in a remote location. The simplest example is Google
Docs. You have access from any browser to documents that you’d otherwise have
to store on your laptop. Software-as-a-service is another example, such as
Microsoft Dynamics. Cloud computing makes server-based computing nearly
obsolete.

4. Big data. The
recent bombing in Boston has shown how fast the FBI can analyze massive amounts
of information gleaned from photographs and videos to track down suspects. The
police crowd-sourced the investigation and located the suspects in record
speed. From the dawn of civilization to 2003, five exabytes of data were
created. By 2010, the same amount was created in only two days. As of January
of this year, the world is creating five exabytes of information every 10
minutes.

Since companies have rapidly growing amounts of data that
are often stored in multiple systems, conventional data analysis is no longer
sufficient to optimize insight. New tools on the market allow companies to
organize, analyze, and monetize data quickly. While conventional analytics
explained the past, predictive analytics can predict future sales
opportunities. According to Frost and Sullivan, 49 percent of companies are not
using predictive analytics. This is the time to cash in on big-data tools to
improve revenue.